Staying Ahead of the Curve in 2021: Where We See Opportunity
The global economy has changed drastically in the last year. Amid volatile market conditions, Blackstone has navigated the investment landscape by staying true to our high-conviction investing approach. We back companies in sectors and industries we think will drive growth, shape consumer behavior, and help us leverage our scale to add value for investors and communities in the post-COVID world.
The first six months of the year has been an exceptionally active investment period for Blackstone. In fact, we recently announced one of the largest transactions in our industry’s history: investing in Medline, the nation’s biggest privately held manufacturer and distributor of healthcare supplies led by the Mills family. Medline partners with healthcare providers around the world, delivering products and solutions that reduce costs, increase supply chain efficiency, and improve the quality of care. Large corporate partnerships with family-led companies are an area where we have deep experience, and we look forward to leveraging our scale and global presence to help support Medline’s further expansion.
Below, we take a closer look at some of our other highest-conviction themes and investments from the first half of 2021.
Renewables and Sustainability
The market for renewable energy is growing rapidly. It’s driven by technological advancements that have made renewables more affordable, accessible, and reliable. At the same time, many consumers are also increasingly seeking more sustainable forms of energy. Blackstone has sought to invest in promising companies that can provide critical infrastructure for this transition.
Earlier this year, Blackstone entered into an agreement to partner with Strata Solar, a leading provider of solar and battery-energy-storage systems. Our credit business and affiliates will help provide Strata capital to help fund development, construction and ownership of utility scale solar and storage assets across North America. Blackstone Energy Partners, the energy investing arm of our private equity group, also acquired Sabre Industries, which manufactures essential infrastructure for the U.S. electrical grid.
DEAL SPOTLIGHT
DESOTEC
The thesis: The thesis: Governments, consumers and institutional advisors expect businesses to prioritize sustainability. DESOTEC’s cost-effective, adaptable carbon filtration solutions help companies across Europe reduce their environmental impact.
The investment: Blackstone acquired DESOTEC through our core private equity strategy, which seeks to identify high-quality businesses and hold them for longer periods than traditional private equity. Our long-term partnership will help DESOTEC accelerate expansion across Europe to strengthen its market-leading position.
Global Logistics
Logistics has long been one of our highest-conviction investment themes. The explosive growth of e-commerce, especially over the past year, has reinforced our confidence in the sector.
We see opportunity in underpenetrated e-commerce markets where our expertise can help retailers grow. In India and China, where e-commerce makes up a relatively small percentage of the total retail market, we announced majority stake in the largest urban logistics park in China’s Greater Bay Area, and acquired 10.6 million square feet of warehousing assets in Bangalore, Hyderabad, and other major hubs in India.
We also led a $1.6 billion recapitalization of two industrial portfolios owned by LBA Logistics, concentrated in high-performing West Coast markets. Blackstone acquired these portfolios through our Core+ Real Estate strategy, which makes long-term investments in high-quality assets.
Technology and Growth
The pandemic has accelerated technological adoption in nearly every industry. By extension, demand has increased for products and services that help companies ensure security, manage risk, and maintain online connectivity.
Earlier this year, Blackstone reached an agreement with GeoComply, which provides geolocation services to leading technology companies that help them remain compliant with regulations wherever they operate, for a minority investment that aims to support the company’s continued growth in its core markets and help accelerate expansion into new verticals.
BXG also led a $130 million investment in Vectra AI, whose AI-driven cloud security solutions enable clients to detect and respond to cybersecurity threats.
Building off our previous investments, which were driven by a boom in digital content consumption, Blackstone acquired The Sandcrawler business park in Singapore. Its tenants include Disney and Lucasfilm.
DEAL SPOTLIGHT
Hotwire Communications
The thesis: As consumers use more connected devices – from integrated security systems to smart lighting – in their homes and businesses, demand for broadband capacity has surged. Hotwire Communications features a 100-percent fiber network that provides cutting-edge, high-speed internet services to residents across Georgia, Florida and the Carolinas. It has previously been recognized by Netflix as the fastest consumer internet provider for consumers in the country.
The investment: Blackstone’s reach, resources and expertise in digital infrastructure will help Hotwire scale its industry-leading services.
Travel and Leisure
The COVID-19 pandemic affected the travel, hospitality, and leisure industries perhaps more than any other. Our recent acquisition of Extended Stay America with Starwood Capital Group demonstrates our conviction in the travel industry, which we expect will rebound as restrictions ease and people emerge from months of lockdown.
Domestic travel is coming back to life, driving an uptick in summer bookings at Bourne Leisure, a leading operator of caravan parks, resorts and hotels in the UK that Blackstone acquired in February.
In March, Blackstone signed a MOU with Kintetsu Group Holdings, one of Japan’s largest railway companies, for an eight-hotel portfolio in Japan concentrated in Japan’s top tourist destinations. We’re confident in our global hospitality expertise, scale, and strong local team on the ground, to help bring these properties to the next phase of development and position them for future success.
Our private equity and infrastructure businesses also announced the acquisition of Signature Aviation, with Global Infrastructure Partners and Cascade Investments. Private air travel has seen a boost during the pandemic, which we expect will continue even as consumers grow more comfortable taking commercial flights. Our investment is part of our long-hold infrastructure and Core Private Equity strategies. It reflects our confidence in the travel sector not only in the immediate aftermath of the pandemic but for the years ahead.
As the global economy re-emerges from months of lockdown, we look forward to applying our thematic, disciplined investment approach to continue identifying and building great businesses that deliver for our investors.
